The legal system and sources of law
The legal system and sources of law domain tests how UK law is made, ranked and applied in insurance disputes. You must identify the binding source, place it in the court hierarchy and explain why a precedent does or does not apply.
Sources of law
- Primary legislation is an Act of Parliament and prevails over case law; delegated legislation made under an enabling Act has the force of statute within its powers.
- Common law is judge-made law; equity developed separate remedies such as injunction and specific performance and prevails where common law and equity conflict.
- Retained EU law and the Human Rights Act 1998 affect interpretation, but UK courts now apply the domestic statute book first.
Courts and precedent
- The Supreme Court is the final appeal court; the Court of Appeal binds lower courts; the High Court and County Court hear most insurance claims.
- The ratio decidendi is the binding legal reason; obiter dicta are persuasive only. A later court may distinguish a precedent on materially different facts, and a higher court may overrule it.
- Civil claims are proved on the balance of probabilities; criminal charges must be proved beyond reasonable doubt.
Worked example
An insurer relies on an exclusion clause. The High Court is considering a Court of Appeal decision on wording that is identical in all material respects. The High Court must follow the Court of Appeal's ratio. If the clause has an extra proviso, the court may distinguish it and explain why the earlier ratio does not govern. The Supreme Court could overrule the earlier decision, but a lower court cannot.
Traps that cost marks
- Mixing the civil and criminal burdens of proof.
- Treating obiter dicta as binding.
- Assuming equity has been abolished or that all EU-derived law has disappeared.
- Forgetting that a statute can reverse a common law rule, and that delegated legislation can be ultra vires.
Exam focus
Link each source to its practical effect: statute controls policy wording, precedent controls interpretation, and procedure controls how a coverage dispute reaches court.